Why are rates going down? Options

[Andy46]

Hi

When interest rates last rose, i put my loan rates up a 0.2% and was in the zopa in 6 of the markets i lend in. I look today, my rates haven't changed, but i am now only in the zopa in 1 of the markets i lend it. I assume this means others have lowered their rates?

Why are people lowering their rates when interest rates are going up?

Andy

[CoogarUK]

Hi

When interest rates last rose, i put my loan rates up a 0.2% and was in the zopa in 6 of the markets i lend in. I look today, my rates haven't changed, but i am now only in the zopa in 1 of the markets i lend it. I assume this means others have lowered their rates?

Why are people lowering their rates when interest rates are going up?

Andy

Good question. Here's another...

Why do some lenders seem content with a return far less than they would get in a top paying instant-access savings account without the inherent risk?

[PoohBah]

If you are not in the zopa your rate might be higher or lower. Bound to happen as other money comes and goes or people fiddle with their rates. One or two of my offers occasionally drift into the zone, and this happened to coincide with a recent promotion, so I got extra money I was not expecting.

When borrowing is slack, it makes sense to reduce rates a bit if you really want the dosh to shift.

The question about why people would lend at silly low rates is one that is asked regularly but never answered by those who do it. It generates more conspiracy theories than the Express does about Diana.

[adilowes]

The problem with the zopa is it is based on recent quotes (Or is it completed loans, I can never remember). Either way it is based on recent quotes or loans. If they have been relatively small loans then some of the higher rates will have not been included so will lower the zopa. People who set their rates all the time to be within the zopa may then drop their rates, thus lowering the zopa even more. So all it needs is a few Quotes / Loans for say £3k in the 36 month markets and down the zopa will come.

I personally ignore the zopa and use the downloaded data to help decide my rates and also adjust them depending on how much money have in the holding account to go out. If not much waiting to go out up my rates go. Recently I have had a burst of money going out as I had my rates set around the point that money would go out on loans around 3k per 12 month period of loan length and it shot out. As I have a smaller amount waiting now and my standing order not due to pay in for another few weeks I have put my rates up to around the 4k Per 12 month loan length.

Had a number go out at 10% + recently from B and C Markets so I am quite happy.

[roger_at_zopa]

Hi

When interest rates last rose, i put my loan rates up a 0.2% and was in the zopa in 6 of the markets i lend in. I look today, my rates haven't changed, but i am now only in the zopa in 1 of the markets i lend it. I assume this means others have lowered their rates?

Why are people lowering their rates when interest rates are going up?

Andy

A lot of lenders seem to be happy to discount the recommended bad debt figures and maybe even the Zopa .5% fee!! This can be seen in th A36 market where you can borrow (looking at the lastest market data sheet) up to about £2,000 before any lender asking 7.0% are involved. The thing is that 7.0% is 6.5% after fees and just 5.6% after the bad debt figures.

If you watch the "Amount currently offered by Zopa lenders" you will see it rise during the week as funds are added by lenders and fall at the weekend as borrows make load requests. I now only see loans take place over the weekend once the lowest offers are consumed by borrows.

Roger

[CoogarUK]

A lot of lenders seem to be happy to discount the recommended bad debt figures and maybe even the Zopa .5% fee!! This can be seen in th A36 market where you can borrow (looking at the lastest market data sheet) up to about £2,000 before any lender asking 7.0% are involved. The thing is that 7.0% is 6.5% after fees and just 5.6% after the bad debt figures.

I am absolutely in agreement with your view on this. Of course, returns are reduced even further by income tax liability.